Overview

Fiat Automotive Finance Co Ltd (Fiat AFC), based in Shanghai, China, is a wholly owned subsidiary of FIDIS S.p.A. and a part of Fiat Group, the $85 billion automotive business headquartered in Turin, Italy. Fiat AFC offers financial services to Fiat customers, including car dealer financing and consumer credit financing for new vehicles.

Business need:
Fiat Automotive Finance Company is a fast-growth business, yet has just 24 employees dealing with $76 million in loans to car dealers. It relies on SAP software to handle its finances, and LeaseSoft from Netsol Technologies, for its loans management. The company wanted to ensure that these business-critical applications were always available and could be scaled up as the business grew. At the same time, the company did not want to over-invest in a dedicated data center, or hire large IT teams.

Solution:
To meet the twin challenges of growth and lean administration costs, all the infrastructure management services – which include SAP BASIS support, server, operating system, network and database – are fully outsourced to Application Management Services from IBM Global Business Services, while SAP application development and maintenance is handled by Accenture.

Benefits:
With infrastructure management entirely handled by IBM, Fiat is able to concentrate its resources on developing its loan book, which in turn accelerates business growth. The service from IBM Global Business Services includes options to scale up total system capacity, and Fiat AFC staff are free to focus on selling more finance packages to the car dealers and end-customers without concern for IT support issues, helping Fiat AFC to build the business and increase profits.

Case Study

Fiat Automotive Finance Co Ltd (Fiat AFC), based in Shanghai, China, is a wholly owned subsidiary of FIDIS S.p.A. and a part of Fiat Group, the $85 billion automotive business headquartered in Turin, Italy. Fiat AFC offers financial services to Fiat customers, including car dealer financing and consumer credit financing for new vehicles.

Jerry Huang, IT Manager, reports, “Fiat Group is present in China with four representative offices, nine joint ventures and fourteen wholly foreign owned enterprises with a total investment exceeding $1.7 billion. Our company, Fiat AFC, is still small and has only 24 people, and business growth depends on car sales and selling the associated finance. We need scalability and capacity to deal with potential growth without requiring heavy up-front investment.”

Better management of financing
A key business challenge for Fiat AFC is managing thousands of financing transactions with this relatively small number of staff. Every deal requires a comprehensive and accurate track of the assets, interest rates, terms and payments, preserved in a fully auditable format that can be shared with the car dealers.

Both Fiat AFC and the Fiat Group itself operate SAP applications for general business management, including the core financials and controlling components, and Fiat AFC selected LeaseSoft from Netsol Technologies to manage the financing deals.

Fiat Group provides the capital available to Fiat AFC for selling onwards in financing deals, and Fiat Group needs to track its return on investment.

Each loan arranged by Fiat AFC draws down capital from Fiat Group, and transfers it to the LeaseSoft application, which then provides a complete management solution – covering the agreement documentation, payment details, asset valuation and every aspect of the loan arrangement. At the end of each business day, LeaseSoft provides automated reconciliation to SAP general ledger.

“Our total loan book stands at around $76 million,” says Jerry Huang. “We could not possibly manage such a large and growing financial business without the combination of SAP and LeaseSoft, which automates many tasks and greatly reduces the manual administration workload. The figures transferred to SAP general ledger then allow us to manage the general business finances rapidly and efficiently.”

Keeping overheads low
For business efficiency reasons, Fiat AFC operates without an in-house dedicated IT support function. Ensuring that the SAP and LeaseSoft applications are always available is a key concern.

“IBM provides us with a comprehensive hosting service and even selects the servers we use,” says Jerry Huang. “The IBM Global Business Services team ensures that the System x servers, network and operating systems work without problems. The Intel processor-based System x servers run the SAP and LeaseSoft applications and the supporting Oracle database, as well as IBM Tivoli Storage Manager for backup and archive services. IBM also provides SAP BASIS support, offering us high availability and continuous operations.

“The biggest value that IBM brings is the stability and reliability of our system. We require fewer staff as we outsource to IBM with lower labor and capital investment costs. There is no need to build and operate a data center or employ our own maintenance team, helping to keep our operating expenses low. In this way AFC avoids the need for routine operations without giving up control and enhancement strategy. Additionally, data security, which is very important for AFC, is ensured through a strict agreement and continuous checking of IBM service by AFC.